Saying that an acquisition of Anheuser-Busch (NYSE:BUD) would help it make a significant international player, InBev (INB.BT), based in Belgium, made an offer of $65 a share for the largest beer company in America, which values it at $46 billion. The bid by InBev for Anheuser-Busch was unsolicited.
If the deal is accepted and allowed to go through, it would make the combined companies the largest brewer in the world. It makes me wonder if Warren Buffett and Berkshire Hathaway's (NYSE:BRK-A) investment in Anheuser Busch was predicated on the possibility something like this would happen.
As in similar family-owned businesses, the structure of the company is set up to maintain family control while owning a small percentage of the shares in the company. The Busch family, in this case, owns only about 4 percent of the stock, although maintaining control.
This would probably be similar to the Bancroft family which was pressured to sell Dow Jones & Co., even though they had the same type of structure in place.
The difference here is the management of Anheuser-Busch is considered top notch, even thought the stock has been languishing. InBev says they would attempt to keep existing management in place if they would be willing to stay.
There isn't a lot of expected regulatory problems perceived, as the businesses of the two companies don't have a lot of overlap at this time.
Anheuser Busch's main problem has been its slow response to the influx of "imports, craft brews and distilled spirits," which the company hasn't been competing with, keeping more with the mass-produced beverages they've been successful with in the past.
Consumers, on the other hand, have been incrementily gravitating toward the more unique brews in the U.S.
InBev has been streamlining its operations, which has helped it perform fairly strongly, while Anheuser-Busch has been doing the same recently, helping them to strengthen the company from late 2005 and early 2006 poor stock performance.
Being a presidential election year in the U.S., we'll hear the ignorant politicians, especially on the Democrat side, beating their chest in opposition to this at the behest of the unions, but there will be a growing pressure from shareholders to see the deal go through.
According to InBev, the bid is a 35 percent premium over the 30-day average of Anheuser-Busch, and an 18 percent premium over the all-time high of the company of $54.97.
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